Adrian Hatch says the need for the softwood industry to find new markets is even more pressing since the closure of the Kimberly-Clarke pulp mill in Tantanoola, in south east South Australia.

But Mr Hatch says the viability of a new industry like bio-fuels is also dependent on the actions of policy makers..

"In Australian government terms there's been changes over the years with carbon taxing and whether wood can contribute to the carbon tax regimes that apply from time to time - we have recently seen... a very large decline in the price of carbon lead by the decline in European carbon prices.

"So we have to bear all this in mind, because any major development and bio-fuel is a very notable one, is very expensive undertaking to put in and it's got to be viable in the long term."